The Centre for Policy Dialogue (CPD) Tuesday termed the proposed budget for fiscal 2008-09 as an expansionary, populist and traditional from the perspective of revenue expenditures and earnings.
"We think the proposed budget apparently lacks institutional capacity as far as revenue expenditure and earnings are concerned and moreover a bigger annual development programme (ADP) could have been approved considering that the tough jobs (SIDR and floods) were accomplished in the outgoing fiscal," Mustafizur Rahman, executive director of CPD said in a press briefing on the proposed budget held in the city.
The National Economic Council (NEC) has approved an ADP worth Tk 256 billion for fiscal 2008-09, which is 3.4 per cent lower than the original ADP of FY 08, a first time occurrence.
The CPD said the proposed budget is investment-friendly but conservative as far as fiscal rationalisation and development expenditures are concerned.
The leading civil society think tank suggested to keep an eye on coherence with poverty reduction strategy (PRS)-II (2009-2011), maintaining macroeconomic stability for smooth transition to newly elected government, keeping key fiscal-macroeconomic indicators under observation and taking mid-course corrective measures if and when necessary during the implementation of the proposed budget.
"The fiscal year 2008-09 will be a challenging year because of implementation of the Election Roadmap and ensuring the development management in line with PRS-Two," Mustafiz said.
Commenting on the growth performance of FY 08, the CPD said in view of the usual trend in revising the GDP growth rates in the subsequent years, it is anticipated that this year's growth figure might be revised as well and may stand below 6 per cent from 6.2 per cent as mentioned in the budget.
"This downward revision has been made 10 times during the last 13 years," the CPD said.
On the provision of imposing penalties on undisclosed income at a rate of 10 per cent for each year of evasion, the CPD said it will reduce the discretionary power of tax authorities.
"However, such opportunities are intended to increase government's tax income, the success may not be of similar magnitude as last year," the CPD analysis said.
Commenting on the proposed four tier tariff structure, decrease in duty slabs, zero duty on food stuff, fertiliser, medicines and raw cotton, the CPD said the proposal will contribute to the development of local industries and help stabilise prices.
"The continuation of tax holiday until end-June 2011 and other tax benefits will be helpful for employment and income generation," the CPD said.
On the capital market incentives proposed in the budget, the CPD said introduction of book-building method will encourage large companies to go public.
"Besides, the revision of tax rates for companies will increase the indirect pressures on them to go public," the CPD said.
The CPD stressed that the decision to off-load government shares should be promptly implemented.
The think tank also suggested for introduction of derivatives to reduce the risk of investors in the securities market.
On removing the nagging crisis in energy sector, the CPD said state-owned BAPEX should be strengthened and coal-based power plants should be established by using the coal reserves of the country.
"The national coal policy should be immediately implemented," it demanded.
